1.What two characteristics make bonds a more popular long-term alternative to investing in stocks?
1.What two characteristics make bonds a more popular long-term alternative to investing in stocks?
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Consider the following information on large-company stocks for a period of years. |
Series | Arithmetic Mean | |
Large-company stocks | 14.1 | % |
Small-company stocks | 16.4 | |
Long-term corporate bonds | 6.2 | |
Long-term government bonds | 6.1 | |
Intermediate-term government bonds | 5.6 | |
U.S. Treasury bills | 3.8 | |
Inflation | 4.0 | |
1) What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
2) What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Consider the following information on large-company stocks for a period of years. |
Series | Arithmetic Mean | |
Large-company stocks | 14.5 | % |
Small-company stocks | 16.4 | |
Long-term corporate bonds | 6.2 | |
Long-term government bonds | 6.1 | |
Intermediate-term government bonds | 5.6 | |
U.S. Treasury bills | 3.8 | |
Inflation | 4.4 | |
Required: |
(a) | What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Nominal return | % |
(b) | What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
Real return | % |